- BTC tests the recent range’s upper ceiling.
- US-China trade talks are planned for the weekend.
- New Hampshire signs law to buy Bitcoin with state funds.
- FOMC is expected to leave rates on hold.
- Seasonality could lend support.
- Bitcoin technical analysis.
Bitcoin has risen 2.8% over the past 24 hours, testing the upper bounds of the recent consolidation range within which it has traded over the past 2 weeks. It’s worth noting that Bitcoin’s previous consolidation phase in April lasted 2 weeks before a sharp move higher.
Bitcoin’s rise comes amid reports that US and Chinese officials will hold trade talks this weekend in Switzerland. This could potentially de-escalate the trade war, which has hurt risk sentiment over the past month. Any signs of a thawing in relations between the two largest economies could support Bitcoin higher.
This wasn’t the only positive development. The US state of New Hampshire signed a law allowing the state treasurer to invest 5% of public funds into Bitcoin. This could be the start of a bigger movement, a spark, a wave of Bitcoin adoption in state finances, lifting BTC demand, a bullish scenario for Bitcoin.
Institutional demand has also remained strong in recent weeks. BTC ETFs are on track to book net inflows for a fourth straight week, with over $5 billion in net inflows across this period. Ongoing institutional demand could help lift BTC towards 100k.
FOMC rate decision
Attention will now turn to the Federal Reserve rate decision. The Fed is expected to leave rates unchanged at 4.25%- 4.5%, so the statement and Fed Chair Jerome Powell’s press conference will be the primary focus. With the labour market holding up and inflation still above 2%, the Fed has no reason to reduce rates just yet. However, the Fed is in a challenging spot owing to the divergence between US soft data, which has deteriorated significantly, and US hard data, which has so far remained resilient despite Trump’s trade tariff turmoil.
The market will watch closely for any change in the Fed’s stance. A more hawkish-sounding policy could spur a short-term sell-off in BTC. However, despite the unclear economic outlook, Bitcoin has outperformed US equities and Gold over the past month.
Seasonality could offer support
While the old adage “sell in May and walk away” has merit for US stocks, which historically see a weaker performance between May and October, this isn’t necessarily the case for Bitcoin. May has historically been a positive month for BTC, but returns are typically less than in April, with an average of 7% versus 13%.
Bitcoin technical analysis
Bitcoin continues to trade within a tight range. The price has recovered from this week’s low of 93.7k, rallying to test 97.7k, the May peak. The doji candles point to indecision ahead of the Federal Reserve rate decision.
Buyers, supported by the RSI above 50, signaling bullish momentum, will look to break above 97.7k to extend gains towards 100k.
However, the bearish crossover on the MACD could encourage sellers. Rejection at 97.7k could see the price fall towards 93k and below here, the 90k psychological level.
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